In a tumultuous week, it is worth bearing in mind that the digitalisation process undertaken by the cards and payments industry over the past decade leaves it well-placed to help in a time of great need. Several stories this week focused on the role that payments infrastructures, both new and more traditional, might play in getting relief to those in need: in Washington this week high-level talks between the federal administration and the country's biggest lenders worked on ways to make the new $350 billion loan programme for small businesses a reality. Given the complexity of that undertaking, especially in light of the intensified due diligence processes since the 9/11 attacks and the 2008-09 crash, there will need to be adjustments in the plans as they were first presented, Reuters reports, quoting unnamed sources close to the discussions.
Anti-fraud and verification challenges aside, there is an opportunity for payments firms to put their infrastructures to use for another major piece of the relief package that was agreed last week on Capitol Hill: according to Bloomberg, the two largest cards schemes, Visa and Mastercard, could well be instrumental in an enormous funds transfer this month to tens of millions of Americans: each adult, below qualifying thresholds for annual income, is entitled to receive up to $1,200, as well as $500 for each child. On the face of it, this would seem the optimal method for getting the money straight into bank accounts. However, as noted in Verisk Financial Research's latest market update on the United States, cheques are still widely used by Americans and, as a tangible expression of governmental action, have a powerful symbolic value in times of crisis.
Intense closed-door discussions were also underway in London, with the Financial Conduct Authority (FCA) having been in talks with banks on how best to ease the unprecedented hardship of millions of households suddenly faced with a sharp drop in income. An announcement on Thursday morning set out the position that the FCA had taken: the industry watchdog is proposing that lenders, starting on 9 April, allow under-pressure customers the option to postpone loan and credit card payments for up to three months. In addition, the FCA has asked banks to freeze interest on the first £500 ($543) of existing arranged overdrafts. "Over the next 90 days," said the agency, "firms would have to ensure all consumers are no worse off and not paying more than they would have under previous prices." The industry has until 6 April to respond.
Exactly what have been the impacts of the unprecedented lockdown underway worldwide when it comes to consumer spending? Our colleagues at Verisk Financial Marketview in New Zealand have been providing up-to-date data showing the rapid change in consumer behaviour across retail sectors as the government announced a nationwide shutdown, demonstrating the immediate impact of the pandemic on spend in a country that can serve as a microcosm of the global experience. "We saw a week of two halves here", commented Raewyn Tan of Marketview on the week ending 29 March. "On Monday, Tuesday and Wednesday spending rose a whopping 66 percent compared to the same days last year. Over those three days though, transaction volumes rose by just 5.2 percent, highlighting the fact that consumers were stocking up in a variety of ways. Conversely, spending for the rest of the week was down 75 percent, not too surprising given the limited number of businesses allowed to stay open once the full lockdown commenced the night before." Another revealing point: consumer spending for the week was down 18 percent on the same week last year.
It is already a truism to say that our world has been changed by recent events. One curious consequence is that a mass audience has been exposed to complex data visualisations. In the course of understanding the Covid-19 threat, people have seen the power of datasets to provide insights that might otherwise have been hard to pick out. Now Excel, the old and much-loved warhorse of spreadsheets, has had new life breathed into it thanks to a Microsoft partnership with financial services API platform Plaid that turns the software into a fintech app. Initially available for Microsoft 365 subscribers in the United States, the new product, called Money in Excel, allows for the auto-import of credit card and bank account data for analysis, management and tracking purposes.
To end, links to some other stories of interest this week...
Eurozone: Leading economists call for €1tn of crisis bonds
Turkey: Central bank lowers credit card interest rate limit
UK: ATM details reveal sharp year on-year drop in March
US: Chase Sapphire Reserve $100 annual fee credit
The Weekly News Digest from Argus Advisory Research highlights significant developments in payment cards, digital payments, acquiring, processing, retail banking and consumer credit. Our writers and researchers frame these items in contexts such as historical, sectoral and regional trends, adding a layer of value often missing from the rolling news cycle.
About Argus Advisory Research The market-leading online, interactive database and data dashboards covering the global cards and payments industry in detail, plus a range of data-packed country and regional reports. Leveraging financial cards data going back to 2010 – and forecasts up to 2025 – our unique datasets cover countries around the world and feature more than 250 metrics per market.